NEW INDIA ASSURANCE CO. LTD. versus C.M. JAYA AND ORS.

Citation: [2002] 1 S.C.R. 298 · Decided: 17-01-2002 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
D 
E 
NEW INDIA ASSURANCE CO. LTD. 
v. 
C.M. JAY A AND ORS. 
JANUARY 17, 2002 
[S.P. BHARUCHA, CJ., SYED SHAH MOHAMMED QUADRI, 
UMESH C. BANERJEE, S.N. VARIAVA AND 
SHIVARAJ V. PATIL, JJ.] 
Motor Vehicles Act, .1939: 
Section 95(2)-Comprehensive Insurance Policy-Compensation to third 
party-Liability of Insurance Company-When Insurance Company not taking 
any higher liability by accepting a higher premium it would be liable to the 
extent limited under Section 95(2), and not the entire amount. 
The question involved in these appeals is whether an Insurance 
Company not taking any higher liability by accepting a higher premium, 
would be liable to the extent limited under Section 95(2) of the Motor 
Vehicles Act, 1939 or the entire amount in case of payment to a third party. 
Allowing the appeals, the Court 
HELD : 1.1. When Insurance Company is not taking any higher 
liability by accepting a higher premium for payment of compensation to 
a third party, the insurer would be liable to the extent limited under 
Section 95(2) of the Motor Vehicles Act, 1939 and would not be liable to 
F pay the entire amount. (306-H( 
1.2. A statut.ory liability cannot be more than what is required under 
the statute itself. However, there is nothing in Section 95 of the Motor 
Vehicles Act, 1939 prohibiting the parties from contracting to create 
unlimited or higher liability to cover wider risk. In such an event, the 
G insurer is bound by the terms of the contract, as specified in the policy in 
regard to unlimited or higher liability as the case may be. In the absence 
of such a term of clause in the policy, pursuant to the contract of insurance, 
a limited statutory liability cannot be expanded to make it unlimited or 
higher. If it is so done, it amounts to re-writing the statute or the contract 
H of insurance which is not permissible. (305-H; 306-A-BI 
298 
) 
NEW INDIA ASSURANCE CO. LTD. v. C.M. JAY A 
299 
J.3. There is no conflict on the question raised in the order of A 
reference between the decisions of two Benches of three Judges in Shanti 
Bai and Amrit Lal Sood's Cases. In Amrit Lal Sood's case, the decision in 
Shanti Bai is not noticed. However, both these decisions refer to the case 
of Jugal Kishore* and no contrary view is expressed. In the premise, the 
view expressed in the case of Shanti Bai is correct. [306-C-D) 
*New India Assurance Co. Ltd. v. Shanti Bai, [1995) 2 SCC 539, 
affirmed. 
Amrit Lal Sood v. Kaushalya Devi Thapar, [1998) 3 SCC 744, 
explained. 
National Insurance Co. Ltd., New Delhi v. Jugal Kishore and Ors., 
[1998) 1 sec 626, referred to. 
1.4. High Court committed an error in taking the contrary view that 
B 
c 
the liability of the appellant was unlimited merely on the ground ttiat the D 
vehicle in question was covered by a comprehensive policy. In Shanti Bai's* 
case, Court has expressed the opinion that a comprehensive policy issued 
on the basis of the estimated value of the vehicle does not automatically 
result in covering the liability with regard to third party risk for an 
amount higher than the statutory limit. This position is accepted in Amrit 
Lal Sood's* case as well though no reference is made to this case. 
[307-H; 308-BJ 
*New India Assurance Co. ltd. v. Shanti Bai, [1995) 2 SCC 539, 
affirmed. 
E 
Amrit Lal Sood v. Kaushalya Devi Thapar, [ 1998) 3 SCC 744, F 
explained. 
1.5. In the instant case it is clear from the admitted copy of the 
Insurance Policy produced before the Court that the liability of the 
appellant is limited to Rs. 50,000 in regard to the claim in question. No G 
additional or higher premium was paid to cover unlimited or higher 
liability than the statutory liability fixed as found in the term of the policy. 
Therefore, the Tribunal rightly held that the liability of the appellant is 
limited to Rs. 50,000. (307-E-Gf 
New India Assurance Co. v. CM. Jaya and Ors., (1999) 2 SCC 47; H 
,_, 
300 
SUPREME COURT REPORTS 
[2002] I S.C.R. 
A Pushpabai l'urshottam Udeshi and Ors. v. Ranjit Ginning & Pressing Co. (P) 
Ltd. and Anr., 119771 2 SCC 745; New India Assurance Co. Ltd. v. Ram Lal 
& Ors., 11988] Supp. SCC 506 and National Insurance Co. Ltd. v. Nathilal 
& Ors., 1199911 SCC 552, referred to. 
CIVIL APPELLATE JURISDICTION 
Civil Appeal Nos. 4566-
B 4567 of 1996. 
From the Judgment and Order dated 29.9.95 of the Delhi High Court 
in F.A.O. No. 268/81 and C.M. No. 854 of 1983. 
Uday Gupta, Ms. Nina Gupta, Ms, Arpita Mahajan, Ms. Praneeta Sharma 
C and V

Excerpt shown. Read the full judgment & AI analysis in Lexace.